My husband and I bought our starter house about 6 years ago. Fast forward 4 years and 1 baby later and we moved. We tried to sell our old house, even had a cash buyer and a contract on it…until the appraisal came in.
It appraised for $2,000 less than we purchased it for despite some SERIOUS renovations. (New roof, new central air system, new water heater, redid the hardwood floors, new kitchen, built a new laundry room etc.) The buyer backed out, but she had already lined up a renter so we let them move in and found ourselves becoming accidental landlords.
We’ve been landlords for 2.5 years now. The house is always rented and will be paid off in the next year, at which point we would be making about $660.00 a month after taking into account taxes, insurance and repairs (oh so many ongoing plumbing repairs!) Currently we break even.
My concern is the house’s depreciated value. I haven’t had it appraised since we tried to sell but some real estate friends say it doesn’t look good. The rental market in our town is always strong due to a nearby military base. The housing market is weak for sellers.
So the question is:
Do we keep the depreciating house as a rental property and pay it off asap?
OR
Do we cut our losses and sell the house for a loss and put our money into a better investment?
House Stats:
Market Value: $125,000 (based on most recent appraisal from 2015)
Original Purchase price: $127,000
Monthly Mortgage Amount: 636.00
Interest Rate: 3.75%
Mortgage Term: 30 year
Term remaining: 24 years, BUT we plan to have the house paid off in 2018.
Amount remaining on mortgage: $17,800
Gross Rent: $900.00 per month
Taxes and Insurance
• Taxes: $975.00
• Insurance: $1967.20
HOA costs: $0
Maintenance Costs: $630 per year. We have plumbing issues despite having replaced the sewer line and almost all the plumbing in the house.